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Risk Assessment and Allocation for Highway Construction Management
1. Introduction
1.1. Project Management Approach
Successfully delivery of national and State highway facilities requires the application of a broad set of program and project management tools. Scope, design, cost, and schedule management are all regarded as essential for every major project. Highway agencies and their partners in the contracting community are well versed in cost estimating and scheduling techniques for these facilities and often apply them numerous times on each project. The treatment of risk is much less uniform and understood across the transportation community. Risk management processes, tools, documentation, and communication are less standardized than any other dimension of transportation project management. The goal of this document is to provide a concise guide to the risk assessment and allocation process in highway construction, as well as to draw on other infrastructure and major project areas for examples of risk management practice.
The international community has an awareness of risk assessment and allocation techniques that is just now evolving in U.S. highway agencies. The Highways Agency in England has developed Highways Agency Risk Management (HARM) to model the uncertainties of estimates for cost and time to ensure robust and realistic budgets for publicly financed projects. (1) The Ministry of Transport, Public Works, and Water Management in the Netherlands has developed the Public Sector Comparator and the Public-Private Comparator (PSC/PPC) to assist with these same analyses. (2) Both agencies have dedicated staff that support project teams in identifying and quantifying project risk using probabilistic techniques, and then choosing delivery and contracting strategies that can best control and mitigate these risks.
Risk management and risk planning are used interchangeably to describe a sequence of analysis and management activities focused on creating a project-
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